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| Volumes stayed low in a four-session week. But prices continued to move up. The Sensex closed at 4552.92 points for a gain of 3.89 per cent last week. |
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| The Nifty gained by 4.49 per cent to close at 1449.30 points. The Defty rose even more by 5.18 per cent as the rupee continued its bull run versus the dollar. |
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| Apart from the low volumes, breadth indicators improved. Advances outnumbered declines by a healthy margin and the put-call ratio was up slightly at 0.31. The broad BSE500 rose by 4.80 per cent. |
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| Outlook: By breaking through a key resistance at Sensex 4430/Nifty 1420, the market continued its bull-trend. It could continue to climb through next week although this current trading zone is one with massive resistances. |
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| The likely pattern through next week is net gains, with choppy intra-day trading and several sharp selloffs. The erstwhile resistance at 4430/1420 now becomes a key support. If the market does dip below that, this entire upmove could abort back down to Sensex 4150/1300. |
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| Rationale: In the past month or so, the market has seen a reaction of around 23 per cent of the upmove that started in early May. This is a first Fibonacci level and it is possible that the correction ended there. |
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| In the past week, the pattern has completed a saucer, which is a bullish pattern. |
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| The market now has upside projections of around Sensex 4750/Nifty 1525 that could be achieved in four-six weeks. The momentum indicators have started to confirm their support of the current move by moving up, without hitting overbought zones as yet. |
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| Counter-view: The lack of volumes is a worrying signal. The market could be overstretched since an upmove that has lasted four-plus months should not normally complete a correction inside three weeks. |
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| A further upmove without a serious pickup in volume could be very vulnerable to a second correction. Keep watching for a sign that FIIs are changing their stance on the market - they are still the key group of investors. |
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| Bulls and bears: The latest upmove may have lacked volumes but it certainly didn't lack for breadth. |
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| The list of stocks that showed significant bullishness included Bajaj, Bombay Dyeing, Concor, Dr Reddy, Gail, GE Shipping, HDFC Bank, Hero Honda, Hindalco, Hindustan Lever, ICICI Bank, IPCL, Infosys, Jaiprakash, L&T, Ashok Leyland, M&M, Mphasis, Nalco, Nicholas, Oriental Bank, Sawpipes, Shipping Corporation, Siemens, Titan, Telco, Tisco, TVS, Voltas and Zee. The sectoral trends appear to favour select PSUs, auto-stocks of all descriptions, some cement companies and the better banks. |
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| Second-quarter results are around the corner and most analysts are pretty optimistic about the profitability trends. |
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| MICRO TECHNICALS |
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HDFC BANK
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Current Price: Rs 294.5
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| Target Price: Rs 320 |
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| The stock has risen close to an all-time high on excellent volumes. It has just completed a bullish saucer formation, which has a target projection in the range of 320-325 over the next 7-10 sessions. |
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| The saucer is reinforced by a slightly longer-term formation with a double-bottom. |
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| There will be some resistance at around 302-305. Either wait for a close above 305 or go long and keep a stop at about 284. Taking partial profits at around 302 may be prudent. |
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CONTAINER CORP
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Current Price: Rs 537.35
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| Target Price: NA |
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| The stock has made a big breakout in the last seven sessions and this is backed by decent volumes. Concor seems a decent long-term buy but target projections are not possible with the current formation. |
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| Since March, it has established a rising trendline at around 35 degrees from a low of around 210 and it has risen off that trendline in the last two weeks. Investors could wait for a possible decline to around that trendline again. |
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| Alternatively, go long now and keep a stop around 505 - the big jump implies lack of support closer to current price. Also note that any PSU carries higher trading risks because of the volatile policy environment. |
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HINDALCO
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Current Price: Rs 977
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| Target Price: Rs 1,000 |
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| The stock has completed a bullish saucer formation with a breakout that is backed by higher volumes. The target projects would be in the range of 1,000-1,020 in the short-term. |
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| On longer-term formations, there appears to be a possibility of a climb into the 1,250 zone. Go long, and book partial profits if it moves above 1000. |
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| Setting stops is difficult because the stock has shown high intra-day ranges - it is quite possible that it will oscillate between 970 and 1,020 on a daily basis. Get out if it closes below 930. |
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SCI
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Current Price: Rs 140.4
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| Target Price: Rs 155 |
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| The stock saw a massive jump on Friday backed by huge volumes. This is based on expectations of positive developments on the divestment front. |
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| We can't project targets from daily timeframes but the weekly timeframes suggest that the upmove could go until the 155 level. |
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| There is a higher trading risk because of the unpredictable policy environment. If things go wrong, exits may only be possible around the 110 level. |
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ZEE
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Current Price: Rs 135
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| Target Price: Rs 145 |
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| The stock has shot up on a decent volume expansion. The short-term targets project a move until the 146 level at least. |
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| A look at long-term charts suggests that the move could be strong enough to push the stock until the 175 level with a possible target in the 190 zone. Go long, keep a stop around 125 and book partial profits at 145. |
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| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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